Cheltenham beware as Corcoran tightens reins

BETTING giant Paddy Power Betfair reaped many of the rewards of its merger last year, despite a net-loss figure and headlines about what a tough Cheltenham it was.

On Tuesday, the group reported a £5.7m (€6.52m) loss for the financial year ended December 2016. This was mainly due to merger expenses. The true performance picture showed the value of the merger to investors as it turned in an 18pc increase in revenues to €1.55bn and a massive 35pc rise in EBITDA to €400m.

This gives some idea of the profit potential that lies ahead. Yet the shares fell 5pc on the back of concerns about the performance of its online gaming business.

Chief executive Breon Corcoran was quite candid about saying it had perhaps taken its eye off the ball a little in this segment, as growth in online gaming slowed in the fourth quarter.

Online gaming is enormous, especially in the UK but is becoming incredibly competitive. Recent figures show that of the £4.6bn (€5.26bn) of online gambling in the UK, around £2.6bn (€2.97bn) comes from casino gaming.

Corcoran has delivered so far on the merits of the merger and the group may end up returning more money to shareholders if it cannot identify suitable acquisitions.

Corcoran doesn’t want to return too much to Cheltenham punters though having lost €20m to them last year. He said he doesn’t expect to lose that kind of money this year. Given that he doesn’t know who is going to win, he is obviously preparing to tighten up on odds and risk management this year.

Punters — you have been warned.